Tax changes from 2025 for entrepreneurs in Germany

Thresholds at which entrepreneurs must prepare balance sheets and keep double-entry bookkeeping under tax law have been increased from 2025.

Previously the turnover limit was €600,000 per year below which companies were not required to prepare balance sheets; from 2025 a company with turnover up to €800,000 will not be required to prepare balance sheets.

As regards profit generated, the threshold increases on 01.01.2025 from €60,000 to €80,000.

If one of these thresholds is exceeded, single-entry accounting with a profit and loss statement may initially be continued until the tax office orders double-entry bookkeeping.

If a threshold was exceeded and it is not expected to be exceeded again in the future, an exemption from the double-entry bookkeeping requirement can be applied for at the tax office.

From 01.01.2025 the threshold for the small-business VAT scheme (Kleinunternehmer) in Germany also changes. A small business is exempt from VAT if annual turnover does not exceed €25,000 (until end of 2019: €17,500, until end of 2024: €22,000). A small business may opt into VAT voluntarily, but should consider whether it is beneficial given all costs and pricing; it is often worth consulting a tax adviser to analyse the pros and obligations.